New hitch in Oakland pot permit pipeline

Greg Minor, Assistant to the City Administrator � Special Permits and Nuisance Abatement, leads an informational meeting hosted by the Cannabis Regulatory Commission in the City Council Chambers in City Hall July 21, 2016 in Oakland, Calif.

Photo: Leah Millis, The Chronicle

John Oram is relieved.

Oram is the CEO of Bloom Innovations, a horticulture consulting and management firm in Oakland. Bloom distributes cannabis products — seeds, flowers, concentrates, infused edibles and more — under the brand name NUG, a Bloom subsidiary.

Bloom employs more than 100 people and pays 5 percent of gross revenue to Oakland, according to Oram.

“And gladly so,” Oram said. “I want to pay what’s due.”

Here’s what had Oram worried: On Jan. 1, California’s new cannabis regulations take effect. The rules mean all recreational and medical marijuana businesses must have licenses from the state to operate — and to get state licenses, businesses must first obtain local permits.

Greg Minor, who oversees pot permitting in Oakland, expects the first permits to be issued in the next two months.

“There’s a handful or a dozen or so that may be getting close,” he said. “I would expect some businesses will have a permit before the end of the year, but in some cases it could take time. But it largely depends on the operators to move forward through this process.”

Because of delays in the local permitting system, the state Bureau of Cannabis Control is allowing businesses still waiting for local permits to apply for temporary state licenses. First, they must show a letter of authorization from the local government.

Oakland is considering giving those letters out — but with a caveat.

Oakland City Councilwomen Desley Brooks and Rebecca Kaplan have proposed a plan that provides the authorization only to equity applicants or general applicants who incubate an equity applicant. The City Council will vote on the Brooks-Kaplan plan Nov. 7.

Equity applications are reserved for people who were convicted of a marijuana-related offense in Oakland, earn an income less than 80 percent of the city average or have lived for 10 of the past 20 years in an Oakland neighborhood that saw a disproportionately high number of cannabis arrests.

The goal is to motivate general applicants to incubate equity applicants. But if businesses are simply applying as a general applicant, they’re going to be at the end of the line — and in danger of not having the proper paperwork to operate on Jan. 1.

Without the permit and license, Oakland’s cannabis businesses have the choice of shutting down on Jan. 1 and halting operations until they are issued a local permit so they can apply at the state level — or they can continue operating in violation of state law, exposing themselves to possible crackdowns.

The move by Brooks and Kaplan punishes businesses that don’t have the capacity to provide the 1,000 square feet of free space that is required to incubate an equity applicant.

“It’s good for a narrow category of applicants, some of whom happen to be my clients. But it’s punitive to most applicants,” said Robert Selna, an Oakland-based land-use attorney who represents marijuana businesses. “The city is choosing winners and losers. If you are an equity applicant, or you happen to have the resources to incubate an equity applicant, you’re a winner. If you are neither of those, then you’re a loser.”

Chip Moore, CEO of 4&20 Blackbirds, a cannabis delivery company, has been critical of the city’s permitting process because it repeatedly stalled as City Council debated reparations for people of color disproportionately affected by marijuana arrests and convictions. Though he supports the amendment proposed by Brooks and Kaplan, because it clears his path for temporary state licensing, he also sees a city unfairly reneging on promises.

Remember, Oakland was the first city in the U.S. to issue a permit for a medical cannabis dispensary in 2004, using the distinction to lure cannabis business owners to the city. Now the city will protect only a select few.

“This will allow cannabis business owners like myself and hesitant entrepreneurs to have some stability in creating business opportunities for Oakland’s stagnant cannabis industry,” said Moore, who will incubate two equity applicants. “However, this will affect other general applicants who do not have the real estate to incubate or capital and will ultimately be pushed out of this industry in Oakland.”

It works out well for Oram. Bloom is incubating six equity applicants, and each business gets a 1,200-square-foot greenhouse on a lot in Oakland.

“The alternative was going to be detrimental to the industry as a whole, to the equity program and to my business,” Oram said.

Otis R. Taylor Jr. is the East Bay columnist for The San Francisco Chronicle, focusing on the people who make the region a fascinating place to live and work. A South Carolina transplant, Otis spent more than a decade at The (Columbia, S.C.) State newspaper, writing about arts, culture and entertainment. Previously, Otis was the managing editor of a tech startup. Otis is interested in reporting on issues relating to diversity and equality in the East Bay, as well as the region’s history, culture and politics. He studied English at Clemson University.